Head Of Goodwill Industries Under Federal Probe

August 29, 1985|By William B. Crawford Jr.

The executive director of Goodwill Industries is the target of a federal grand jury probe into allegations that he converted assets of the charity to his personal use, the head of the U.S. Justice Department`s Organized Crime Strike Force in Chicago said Wednesday.

Gary Shapiro, strike force chief here, confirmed the existence of the probe and said it was being coordinated with agents of the Internal Revenue Service and investigators from the Illinois attorney general`s office.

Shapiro said the investigation was triggered when Goodwill employees contacted authorities with allegations that Harry H. Woodward Jr., Goodwill`s executive director since 1978, was converting charity assets to his personal use. Shapiro declined to elaborate further.

Woodward said, ``We are cooperating fully with the federal grand jury and are honoring the subpoena which was issued to us and, beyond that, we have no further comment.``

Goodwill is a nonprofit organization specializing in job-training for the handicapped and selling second-hand merchandise.

According to sources close to the investigation, the subpoenas seek records of Goodwill`s real estate transactions dating back to 1980, including all records of donations, sales, mortgages, leases and rents and contracts with agents who negotiated the donations.

Sources said that Herman Kaye, identified as a Goodwill consultant, also is a target of the probe.

According to sources, the investigation focuses on the disposal of property that had been donated to Goodwill.

The sources said Goodwill has been the recipient of property from business executives or corporations that own land or buildings which are no longer needed--because tax write-offs have been exhausted, the business has become defunct, the firm has moved out of the state or the property can no longer be maintained.

Rather than sell the property, it is donated to Goodwill as a charitable contribution.

Sources said the scheme under investigation involves selling the donated property at less than its full value to a ``nominee`` who then would resell the property for a higher price.

For example, Goodwill might receive donated property with an appraised value of $500,000. The property then would be sold to a ``straw man`` for $300,000 on the pretense that no higher price could be obtained. The ``straw man`` later would resell the property for $500,000, according to the scenario outlined by sources. The grand jury is investigating to determine if Woodward and Kaye shared in the difference, sources said.

Sources said the scheme involved some land parcels, but mostly involved buildings.

They said that in 1984, Goodwill was holding for resale more than $1.3 million in donated real estate and that it received more than $700,000 in additional real estate that year.